The Malawi kwacha continued its appreciation against the world’s reserve currency, United States dollar, climbing to sell at K328 per dollar.
Exchange rates monitored at Bureaus and the National Bank show that this movement is from K354 the previous week down from the all time high of K480 per dollar since December last year.
Minister of Finance Ken Lipenga said the developments on the market are because government is focused on tightening its fiscal policy.
In his Budget presentation on Friday, Lipenga said they Malawi will remain on track on its programme to reduce inflation and stabilize the exchange rate as in the past government has in the past relied on monetary policy.
“Beginning from the 2012/13 fiscal year, government planned the fiscal policy, so that it complements its critical role, just as the monetary policy in dealing with inflation and exchange rate. You will agree with me that in the past, programme targets were missed primarily on account of loose fiscal stance.
“In order to sustain and build on the gains achieved so far, the fiscal policy will have to remain very tight in the coming year. Mr. Speaker, Sir, in this regard, the fiscal anchor for the 2013/14 fiscal year, like that of the current financial year, remains ‘No Net Domestic Financing” with a planned net domestic debt repayment of K7.2 billion, which is equivalent to 0.5 percent of GDP,” said Lipenga.
During the first week of May the Reserve Bank of Malawi (RBM) said gross foreign exchange reserves increased to 1.65 months or $306 million but this was still the recommended base of three months of import cover.
Overall, Lipenga said the domestic economy this year is expected to rebound to 5 percent from 1.8 percent in 2012.
He said the growth is mainly being driven by improvements in the agricultural, forestry and fishing sector with more prospects from tobacco production at 156 million Kg in 2013 from 79 million Kg in 2012.
“In addition, manufacturing is also expected to increase on account of higher tobacco processing and fewer production bottlenecks related to fuel and foreign exchange problems. As indicated earlier, Mr. Speaker, Sir, capacity utilization in most of the sectors has shown great improvement,” said Lipenga.
President Joyce Banda often tells Malawians at rallies that they should be patient as her economic reforms would “pay off soon”.Follow and Subscribe Nyasa TV :